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Fine wine comment - Peter Shakeshaft, Vin-X

Published:  27 July, 2012

For fine wine enthusiasts who have invested in the past 18 months there has been little to cheer about. The market has experienced a general downturn in value, but still holds it own when measured against other asset classes. Those who have been in the market for a number of years are relaxed, having more of a feel for the natural dynamics of the correction we have endured since mid 2011.

For fine wine enthusiasts who have invested in the past 18 months there has been little to cheer about. The market has experienced a general downturn in value, but still holds it own when measured against other asset classes. Those who have been in the market for a number of years are relaxed, having more of a feel for the natural dynamics of the correction we have endured since mid 2011.

Of the first growths, Latour has been an investor favourite. By mid-May it was the best-performing first growth, particularly with sales of the 2009 and 2010 vintages. Furthermore, Liv-ex reported that Latour 2010 sales represented 53% of all Bordeaux 2010 sold in May, partly due to the chateau's announcement it will depart the en primeur system post-2012.

Lafite, meanwhile, continued to be the biggest loser, falling almost 12% since the start of 2012. During my recent trip to Bordeaux the whisper on the grapevine was that the fall has been in part due to the counterfeit issues the brand has suffered in the Far East. Whether this has had any real effect is debatable; this iconic brand may have seen a slowdown in Asian demand but continues to be a Far East favourite. With almost all Lafite vintages down by 30% year on year and some, such as 2008, currently halved in price, the analysts at Vin-X believe certain vintages at the right price are now upgraded to a BUY.

Liv-ex reported in early July that the cumulative performance of its Investables Index (which tracks 200 wines from the top 24 Bordeaux chateaux), since 1988, stands at a long-term five-year compound average growth rate (CAGR) of 14.9%. The CAGR on July 4, 2012, was 4%, the lowest it has been in six years.

Historically, when investing at a time when the previous five years have returned a CAGR of less than 5%, the average compound return achieved in the following five years was a staggering 17.6%. Now might be the best opportunity to invest at such value prices and, for those wines our analysts believe are undervalued, take the opportunity to "average down" your investment price - so take stock, select wisely and enjoy the ride.

Vin-X is Harpers' fine wine partner. Visit vin-x.co.uk or call 020 3384 2263.

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